For more information, contact:

Mike El-Hillow Advanced Energy Industries, Inc. 970.407.6570 mike.el-hillow@aei.com

Cathy Kawakami Advanced Energy Industries, Inc. 970.407.6732 cathy.kawakami@aei.com

AE Reports Second Quarter 2003 Results

FORT COLLINS, Colo., July 24, 2003—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the second quarter ended June 30, 2003. Advanced Energy is a leading global provider of critical solutions used in the production of semiconductors, flat panel displays, data storage products and other advanced thin film applications.

 

Revenue for the second quarter of 2003 was $62.9 million, a decrease of 7 percent compared to second quarter 2002 revenue of $67.9 million. Revenue for the second quarter of 2003 increased 12 percent compared to first quarter 2003 revenue of $56.2 million. Net loss for the second quarter of 2003 was $5.8 million, or $0.18 per share compared to the second quarter 2002 net loss of $5.1 million, or $0.16 per share. This compares to the first quarter 2003 net loss of $8.6 million, or $0.27 per share.

Revenue for the six months ended June 30, 2003 was $119.1 million versus $110.8 million for the first six months of 2002. Net loss for the 2003 six-month period was $14.4 million, or $0.45 per share, compared with a net loss of $13.9 million, or $0.43 per share, for the 2002 six-month period.

Doug Schatz, chairman and chief executive officer, said, "Our second quarter results were in line with our expectations. Revenue came in slightly above our prior guidance range as we experienced some pick-up in demand in our power and mass flow control product groups. We believe our demand momentum will continue to increase moderately in the near term as we continue to penetrate new and existing markets.

"Advanced Energy is well-positioned to extend our market and technology positions by leveraging our product portfolio in power, flow, plasma and ion sources, and thermal products to solve critical manufacturing issues," said Mr. Schatz. "Our commitment to investment in research and development focused on our four key technology areas strengthens our product offerings and opportunities, providing greater competitive advantage to our customers."

Based on information currently available, the Company expects third quarter revenue to increase 3 to 8 percent, in the $65 million to $68 million range, and expects a loss per share range of $0.11 to $0.13.

Second Quarter 2003 Conference Call

Management will host a conference call today, Thursday, July 24, 2003 at 5:00 pm Eastern time to discuss the financial results. You may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-679-7720. For a replay of this teleconference, please call 706-645-9291, code 8359784. The replay will be available through Thursday, July 31, 2003. There will also be a webcast available at www.advanced-energy.com.

About Advanced Energy

Advanced Energy is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other advanced product applications.

Leveraging a diverse product portfolio and technology leadership, AE creates solutions that maximize process impact, improve productivity and lower cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, plasma and ion beam sources, and integrated process monitoring and control for original equipment manufacturers (OEMs) and end-users around the world.

AE operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, AE is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com.

Safe Harbor Statement

This press release contains certain forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, the volatility and cyclicality of the semiconductor and semiconductor capital equipment industries, the timing of orders received from our customers, our ability to execute on the cost reduction initiatives currently underway, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q as well as other reports and statements, as filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at www.sec.gov . Copies may also be obtained by contacting Advanced Energy's investor relations at 970-407-6732. The company assumes no obligation to update the information in this press release.

     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended  Six Months Ended
June 30,           June 30,
2003     2002      2003      2002
Sales                             $62,946  $67,893  $119,104  $110,780
Cost of sales                      42,673   43,581    80,881    73,094
Gross profit                       20,273   24,312    38,223    37,686
Operating expenses:
Research and development         12,551   12,587    25,918    23,835
Sales and marketing               8,261    8,712    16,591    15,463
General and administrative        5,518    7,030    11,147    13,828
Restructuring charges               768       --     2,277        --
Litigation damages                   --    5,313        --     5,313
Total operating expenses       27,098   33,642    55,933    58,439
Loss from operations               (6,825)  (9,330)  (17,710)  (20,753)
Other (expense) income, net        (2,340)   1,424    (5,090)     (573)
Loss before income taxes           (9,165)  (7,906)  (22,800)  (21,326)
Benefit for income taxes           (3,391)  (2,767)   (8,436)   (7,464)
Net loss                          $(5,774) $(5,139) $(14,364) $(13,862)
Basic and diluted net loss
per share                         $(0.18)  $(0.16)   $(0.45)   $(0.43)
Basic and diluted weighted-average
common shares outstanding         32,206   32,045    32,183    31,959
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30,        December 31,
2003             2002
ASSETS
Current Assets:
Cash and cash equivalents              $46,383           $70,188
Marketable securities                  102,969           102,159
Accounts receivable                     44,776            43,885
Income tax receivable                   14,078            14,720
Inventories                             55,727            57,306
Other current assets                     7,265             6,828
Deferred income tax assets, net         26,160            17,510
Total current assets                     297,358           312,596
Property and equipment, net               41,404            41,178
Deposits and other                         5,195             5,181
Goodwill and intangibles, net             86,255            86,601
Deferred debt issuance costs               3,541             4,091
Demonstration and customer service
equipment, net                            5,343             6,086
Total assets                            $439,096          $455,733
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable                 $18,988           $16,055
Other current liabilities               26,534            31,064
Current portion of capital
leases and senior borrowings           13,006            15,197
Accrued interest payable on
convertible subordinated notes          2,460             2,338
Total current liabilities                 60,988            64,654
Long-term Liabilities:
Capital leases and senior
borrowings                              8,078            10,665
Other long-term liabilities                618               694
Deferred income tax liability,
net                                     9,392             8,663
Convertible subordinated notes
payable                               187,718           187,718
Total long-term liabilities              205,806           207,740
Total liabilities                        266,794           272,394
Stockholders' equity                     172,302           183,339
Total liabilities and stockholders'
equity                                 $439,096          $455,733
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June 30,
2003              2002
NET CASH USED IN OPERATING ACTIVITIES         $(10,785)         $(16,310)
NET CASH USED IN INVESTING ACTIVITIES           (9,672)          (29,026)
NET CASH USED IN FINANCING ACTIVITIES           (3,692)           (2,176)
EFFECT OF CURRENCY TRANSLATION ON
CASH                                              344             1,700
DECREASE IN CASH AND CASH EQUIVALENTS          (23,805)          (45,812)
CASH AND EQUIVALENTS, beginning of
period                                         70,188            81,955
CASH AND EQUIVALENTS, end of period            $46,383           $36,143

SOURCE Advanced Energy Industries, Inc.